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2009-02
Do Islamic Banks Have Greater Market Power ?
Laurent Weill
February 2009
Ecole de Management Strasbourg
Pôle Européen de Gestion et d’Economie
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Do Islamic Banks Have Greater Market Power ?
This version: February 2009
Laurent Weill 1
University of Strasbourg and EM Strasbourg Business School
LARGE, 47 avenue de la Forêt Noire
67000 Strasbourg
e-mail: [email protected]
1
I would like to thank Christophe Godlewski for his help.
1
Do Islamic Banks Have Greater Market Power ?
This version: February 2009
Abstract
The aim of this paper is to investigate whether Islamic banks have greater market power than
conventional banks. Indeed Islamic banks may benefit from a captive clientele, owing to
religious principles, which would be charged greater prices. To measure market power, we
compute Lerner indices on a sample of banks from 17 countries in which Islamic and
conventional banks coexist over the period 2000-2007. Comparison of Lerner indices shows
no significant difference between Islamic banks and conventional banks. When including
control variables, regression of Lerner indices even suggests that Islamic banks have a lower
market power than conventional banks. A robustness check with the Rosse-Panzar model
confirms that Islamic banks are not less competitive than conventional banks. The lower
market power of Islamic banks can be explained by their different norms and their different
incentives.
JEL Codes: G21, D43, D82.
Keywords: Islamic banks, Lerner index, Bank Competition.
2
I. Introduction
There is a wide expansion of Islamic banks in the recent decades. Since the creation of
the first modern Islamic bank in 1975, the number of these institutions has increased to over
300 operating in more than 75 countries. Total assets of Islamic banks worldwide are
estimated at about 300 billion USD with an annual growth rate of more than 15% over the last
decade (Chong and Liu, 2009). 2
Despite this considerable development, the academic literature - though increasing remains scarce on the economic implications of Islamic banking in comparison with
conventional banking. Indeed it is of utmost interest to know whether Islamic banks may
differ than conventional banks for economic issues, and may therefore foster or hamper
economic development in comparison to conventional banks.
In this area, a key question concerns the market power of Islamic banks. Market power
is the ability of a firm to influence the price of products and is therefore directly linked to
competition, as greater competition reduces market power. Islamic banks may have a greater
market power than conventional banks. Indeed they can benefit from a clientele with a more
inelastic demand, coming from religious principles. Most countries with Islamic banks have
the ongoing presence of few Islamic banks with conventional banks. Therefore, religious
clients may be more captive to Islamic banks following their will to respect the Shariah, than
non-religious clients to all categories of banks. El Gamal (2007) mentions that some providers
and observers of the Islamic banking industry refer to these additional charges and rates for
clients of Islamic banks as “the cost of being Muslim”, and stresses the possibility of such
overpricing. 3 Kuran (2004) supports this view by observing that Turkish banks managed to
attract quickly one percent of total deposits in a few months, in spite of a small number of
branches.
The comparative analysis of market power between Islamic and conventional banks is a
fundamental issue for economic development, as several studies have shown the importance
of market power for economic development (Petersen and Rajan, 1995; Jayaratne and
Strahan, 1996; Cetorelli and Gambera, 2001). In a nutshell, the argument is that greater bank
competition enhances access to credit at lower cost that leads to more borrowing for firms,
which promotes growth. More generally, an enhancement of bank competition can favor
financial development by increasing access to financial products and, as literature has shown
2
For a complete reference on Islamic banking, see Iqbal and Mirakhor (2007).
In an interview, El-Gamal indeed argues that he worries about the possibility that “some sectors of the Muslim
American population might be willing to pay $500 more to buy peace of mind”.
(http://www.universityislamicfinancial.com/file/News/Voiceof%20AmericaArticle%2004.09.2007l.pdf)
3
3
a positive link between financial development and economic development (Levine, 2005),
then contributes to foster economic development.
The aim of this research is therefore to measure and compare the market power of
Islamic banks and conventional banks. To do so, we compute Lerner indices on a wide crosscountry sample of banks from 17 MENA and Southeastern Asian countries, in which Islamic
banks and conventional banks coexist, over the period 2000-2007. The Lerner index equals
the price minus the marginal cost, divided by the price. It has been widely used in recent
studies focusing on market power in banking (Fernandez de Guevara, Maudos and Perez,
2005; Fernandez de Guevara and Maudos, 2007; Solis and Maudos, 2008).
To our knowledge, no empirical work has ever investigated this issue. Nevertheless, a
couple of papers can be loosely related to our work, as they also provide elements of
comparison between Islamic and conventional banks through empirical works at the bank
level. In their analysis of efficiency of Turkish banks for the period 1990-2000, El-Gamal and
Inanoglu (2005) notably compare efficiency between banks from different types, including a
few Islamic banks (the so-called “special finance houses”). They find no significant difference
in efficiency between Islamic banks and other banks. Cihak and Hesse (2008) perform a
comparative analysis of Islamic and conventional banks in terms of financial stability. They
compare the Z-score, which is an inverse measure of the bank’s probability of failure, for a
sample of banks from 18 countries. They find that small Islamic banks are financially stronger
than small conventional banks, but large conventional banks are financially stronger than
large Islamic banks. Finally, Olson and Zoubi (2008) compare the accounting ratios of Islamic
and conventional banks for the Gulf Cooperation Council countries. They notably conclude in
favor of a greater profitability for Islamic banks.
The rest of the paper is organized as follows. Methodology is reported in section 2.
Section 3 describes the data. The empirical results are shown in Section 4. We finally provide
some concluding remarks in section 5.
II. Methodology
Empirical research on the measurement of bank competition provides several tools,
which can be divided into the traditional Industrial Organization (IO) and the new empirical
IO approaches. The traditional IO approach proposes tests of market structure to assess bank
competition based on the Structure Conduct Performance (SCP) model. The SCP hypothesis
4
argues that greater concentration causes less competitive bank conduct and leads to greater
profitability of the bank. According to this, competition can be measured by concentration
indices such as the market share of the largest banks, or by the Herfindahl index. These tools
were widely applied until the 1990s.
The new empirical IO approach provides non-structural tests to circumvent the problems
of the measures of competition provided by the traditional IO approach. These latter measures
suffer from the fact that they infer the degree of competition from indirect proxies such as
market structure or market shares. In comparison, non-structural measures do not infer the
competitive conduct of banks through the analysis of market structure, but rather measure
banks’ conduct directly. The measures from the new empirical IO include the Rosse-Panzar
model, which provide an aggregate measure of competition, and the Lerner index, an
individual measure of market power.
In our work, we compute the Lerner index as we want to measure market power of each
bank of our sample. The Lerner index has been computed in several recent studies on bank
competition (e.g. Maudos and Fernandez de Guevara, 2004, 2007; Carbo et al., 2009). It is
defined as the difference between the price and the marginal cost, divided by the price.
The price is computed by estimating the average price of bank production (proxied by
total assets) as the ratio of total revenues to total assets, following Fernandez de Guevara,
Maudos and Perez (2005) and Carbo et al. (2009) among others. The marginal cost is
estimated on the basis of a translog cost function with one output (total assets) and three input
prices (price of labor, price of physical capital, and price of borrowed funds). One cost
function is estimated for each year to allow technology to change over time. Symmetry and
linear homogeneity restrictions in input prices are imposed. The cost function is specified as
follows:
3
3
3
3
1
2
ln TC = α 0 + α 1 ln y + α 2 (ln y ) + ∑ β j ln w j + ∑∑ β jk ln w j ln wk + ∑ γ j ln y ln w j + ε
2
j =1
j =1 k =1
j =1
where TC denotes total costs, y total assets, w1 the price of labor (the ratio of personnel
expenses to total assets) 4, w2 the price of physical capital (the ratio of other non-interest
expenses to fixed assets), w3 the price of borrowed funds (the ratio of interest expenses to all
funding). Total costs are the sum of personnel expenses, other non-interest expenses and
interest expenses. The indices for each bank have been dropped from the presentation for the
4
As the Bankscope database does not provide information on the number of employees, we use this proxy
variable for the price of labor following Maudos and Fernandez de Guevara (2004, 2007).
5
sake of simplicity. The estimated coefficients of the cost function are then used to compute
the marginal cost (MC) as follows:
MC =
3

TC 
 α 1 + α 2 ln y + ∑ γ j ln w j 


y 
j =1

Once marginal cost has been estimated and price of output computed it is able to
calculate the Lerner index for each bank and obtain a direct measure of bank competition.
III. Data
The sample used in this study includes the commercial, cooperative and savings banks
of 17 countries (Bahrain, Bangladesh, Brunei, Indonesia, Iran, Jordan, Kuwait, Malaysia,
Mauritania, Qatar, Saudi Arabia, Sudan, Tunisia, Turkey, United Arab Emirates, Yemen), in
which Islamic banks and conventional banks coexist, over the period 2000-2007.
We use the Bankscope database to collect data from financial statements of the banks,
in line with former cross-country studies including Islamic banks (Al-Muharrami, Matthews
and Khabari, 2006; Viverita, Brown and Skully, 2007; Cihak and Hesse, 2008). We use
unconsolidated accounting data of banks.
We adopt the Tukey box-plot, based on the use of interquartile range to clean data:
banks with observations out of the range defined by the first and third quartiles that are
greater or less than twice the interquartile range were dropped for each input price. We also
perform some truncations for the Lerner indices. All outliers were dropped. These criteria
produce a sample of 1301 observations for 264 banks, with 135 observations for 34 Islamic
banks and 1166 observations for 230 conventional banks. The sample is described by country
and by type of banks in table 1.
Table 2 displays summary statistics for the variables adopted in the estimations. A
striking observation is the similarities of both types of banks. No significant difference in
bank size can be observed. The mean Islamic bank has 3.27 million USD of total assets to be
compared to 3.78 million USD for the mean conventional bank. We also observe very similar
mean input prices for labor and physical capital. The only difference concerns the price of
borrowed funds which is greater for conventional banks (4.93% vs. 3.50% for Islamic banks).
This dissimilarity can be relied to the observation of a greater equity to assets ratio for Islamic
banks (14.72% vs. 10.95% for conventional banks). Indeed, as Islamic banks rely more on
6
equity, they may have lower charges on borrowed funds. Finally, we observe a major
difference for activities with the analysis of the ratio of loans to investment assets, which is by
far greater for conventional banks. This is in line with the different activities practiced by
Islamic banks and conventional banks. Both these latter points suggest including the ratios of
equity to assets and of loans to investment assets in the estimations explaining market power,
as they constitute key differences between both types of banks.
IV. Results
This section presents our results for the differences in market power between Islamic
and conventional banks. We start with the Lerner indices for each type of bank. Next, we
perform regressions of the Lerner index on a set of variables to take control variables into
account. Finally, we perform a robustness check with an alternative measure of competition.
IV.1 The market power measures
We present the means of Lerner indices in table 3 for each type of bank and for each
year. The average Lerner index for the period is 23.71% with yearly means ranging from
18.80% to 27.13%. These figures are comparable to what is found in other studies. For
instance, Fernandez de Guevara and Maudos (2007) find yearly mean Lerner indices between
16.9% and 24.9% for Spanish banks, while Carbo and al. (2009) observe mean Lerner indices
at the country level ranging from 11% to 22% for EU countries with a EU mean of 16%. In
dynamic terms, the evolution of the Lerner index shows a strong increase between 2000 and
2005, followed by a reduction in market power between 2005 and 2007.
However the key issue concerns the comparison of market power between Islamic and
conventional banks. The mean Lerner indices over the period are respectively 24.37% and
23.64% for Islamic and conventional banks. But this difference in favor of Islamic banks is
not systematic, as the analysis year-by-year shows that Islamic banks outperform
conventional banks only for 4 years of our analysis while the opposite is observed for the 4
other years. Nonetheless the main finding is that the difference in market power is not
significant either for each year considered separately or for the full period.
Thus, our major conclusion is the absence of significant difference in market power
between Islamic banks and conventional banks. We do not support the arguments according
to which Islamic banks would have greater market power.
7
However this analysis has not considered the possible role of other characteristics of
banks that differ between both types of banks. Furthermore, the fact that banks come from
different countries should be taken into account. We therefore perform a regression of Lerner
indices on a set of variables including the type of bank and several control variables.
IV.2 Regression
We perform a random effects GLS regression of the Lerner indices. This specification is
motivated by the use of panel data, and the fact that the key explanatory variable, the fact that
a bank is Islamic or not, is constant over time. The set of explanatory variables includes a
dummy variable equal to one whether the bank is Islamic and zero else (Islam). We include
three control variables in the regression: the ratio of loans to investment assets (Loans to
Investment Assets) to take the mix of assets into account, the ratio of equity to total assets
(Equity to Total Assets) to control for risk aversion, and size measured by the logarithm of
total assets (Bank Size). We also include dummy variables for countries and years in the
regression.
We now turn to the analysis of control variables. We observe a significantly positive
sign for the size of the bank, which is in line with the fact that greater banks benefit from
stronger market power. The ratio of loans to investment assets is not significant, meaning that
the structure of assets between loans and investment assets does not exert an impact on market
power. Finally, the ratio of equity to assets is significantly positive, according to which banks
with greater solvency benefit from market power. This finding may be explained by the fact
that better solvency allows the banks to charge greater prices to their services. Several papers
have indeed shown the existence of market discipline among depositors, in particular in
developing or transition countries in which the risk of bank failure is considered as important
(e.g. Karas, Pyle and Schoors, 2009). This discipline means that depositors adapt their
deposits to their perception of the probability of bank failure. Consequently, better solvency
favors confidence of depositors in the bank’s financial situation which can accept to pay more
for this safety.
Therefore, our main finding is that Islamic banks do not have a greater market power
than conventional banks. Our results from the regression even tend to show that Islamic banks
have a lower market power.
Thus, we do not support the view that Islamic banks may benefit from a captive
clientele owing to religious principles, which would be charged greater prices. How to explain
8
the lower market power of Islamic banks? Several explanations can be advanced which focus
either on the different religious or economic incentives of Islamic banks.
A first explanation may be the different objectives of Islamic banks in line with the
distinguished values promoted in Islamic economics. Islamic finance is a part of a more
global paradigm, Islamic economics, which can be defined as the economics in line with the
principles of the Qur’an and the Sunna. While Islamic finance is the most well-known feature
of Islamic economics, this discipline also includes other features as notably the promotion of
Islamic norms of economic behavior.
Therefore, according to Hasan (2004), Islamic banks have different objectives than
conventional banks in line with Islamic economics. Profit is also an objective for Islamic
banks, as it is a survival requirement. Nevertheless these banks have other priorities, as Islam
aims at establishing a distinct social order. The prohibition of interest is indeed not in itself
the objective of Islamic banks, but rather an intermediary target through which Islamic banks
contribute to establish a world in line with Islamic economics principles. A fundamental value
to favor is the promotion of mutual help and cooperation. As a consequence, Kuran (2004)
explains that a producer or a trader is free to seek personal profit, but he must avoid harming
others. Therefore, he must charge fair prices to his customers. Thus, Islamic banks have the
obligation to charge fair prices, which may limit their ability to charge the maximal price
permitted by their degree of market power.
A big debate however exists in the literature about the practice of these specific norms
in Islamic banks. Kuran (1995) observes similar returns on savings deposits for Islamic and
conventional banks in Turkey, while El-Gamal (2007) provides examples of an Islamic bank
explicitly mentioning that its loan rates are similar to those of conventional banks.
Some explanations can also be suggested which are based on the economic incentives
for an Islamic bank to charge lower prices than other banks. Islamic banks may have greater
incentives to avoid moral hazard behavior of borrowers, which gives them incentives to
charge lower loan rates than conventional banks. The reasoning is based on the argument
from Boyd and De Nicolo (2005). They pointed out the fact that lower loan rates make easier
the repayment of loans, and consequently reduced the moral hazard behavior of borrowers to
shift into riskier projects, which leads to lower default risk of borrowers. As a consequence,
the more the bank suffers from moral hazard behavior of borrowers, the more the bank is
inclined to charge lower rates. As Islamic banks follow the profit and loss sharing paradigm in
opposition to conventional banks which charge fixed repayments, Islamic banks are more
9
affected by moral hazard behavior as their return is riskier. They consequently have more
incentives to avoid moral hazard behavior and then to charge lower rates.
Furthermore, we can also point out the fact than, on the deposit side, the depositors of
Islamic banks are similar to shareholders as they do not have a fixed interest rate and share
profits and losses of the bank. Consequently, greater profits from depositor services also mean
higher prices charged for depositors for them. Thus, they may have incentives to refrain prices
of financial services for depositors.
Finally, a last argument can also be advanced which is not guided by specific features of
Islamic banking. As Islamic banking is a relatively recent industry, Islamic banks may be
younger than conventional banks. However literature has shown the existence of switching
costs in the banking industry. These costs notably derive from the time and effort to close an
account or to become comfortable with a new bank (Kim, Kliger and Vale, 2003), or can also
endogenously result from the better information of the bank on their clients than competitors
(Sharpe, 1990; Rajan, 1992). As a consequence, as their establishment is more recent on
average, Islamic banks may have a clientele less captive, which prevents them to have a
similar market power than other banks.
IV.3 A robustness check
To further address the validity of the results, we use an alternative measure for bank
competition in our estimations. We therefore estimate the Rosse-Panzar model (Rosse and
Panzar, 1977), which has been widely applied in banking (e.g. Claessens and Laeven, 2004,
for 50 countries; Al-Muharrami, Matthews and Khabari, 2006, for the six member countries
of the Gulf Cooperation Council). It is a non-structural test, meaning that it takes into account
the actual behavior of banks without using information on the structure of the banking market.
The H-statistic aggregates the elasticities of total revenues to the input prices. It determines
the nature of market structure: it is equal to 0 in monopoly, between 0 and 1 in monopolistic
competition, and 1 in perfect competition.
Several recent studies aiming to explain banking competition have used the H-statistic
as a measure of competition in regressions (Bikker and Haaf, 2002; Claessens and Laeven,
2004). We follow their approach by considering the H-statistic as a measure of competition,
and aims to check the difference in the H-statistic between both types of banks.
Our aim is to have a measure of competition for each type of banks and each year. We
therefore run the Rosse-Panzar model for year to obtain estimates of input prices which are
specific to each year. Furthermore, as we need to have estimates of the coefficients of input
10
prices specific to each type of banks, we include interactive terms for each input price,
jointing the variable with a dummy variable for each type of bank. Consequently, we estimate
the following equation for each year :
α0 + [ α1 (ln w1) + α2 (ln w2)+ α3 (ln w3)] ISLAM
ln REVENUES =
+ [ α4 (ln w1) + α5 (ln w2)+ α6 (ln w3)] CONVENTIONAL
+ α7 ln ASSETS + α8 ln EQUITY TO ASSETS
+COUNTRY DUMMIES
where REVENUES total revenues, w1, w2 and w3 prices of labor, physical capital, and
borrowed funds respectively which are defined below, ASSETS total assets, EQASS the ratio
of equity to total assets, k country, ISLAM dummy variable equal to one whether the bank is
Islamic, CONVENTIONAL dummy variable equal to one whether the bank is conventional.
The variables ASSETS and EQUITY TO ASSETS take into account differences in size and risk
respectively, akin to Bikker and Haaf (2002). Indices for each bank have been dropped in the
presentation for simplicity. Therefore the H-statistic is equal to α1 + α2 + α3 for Islamic
banks and to α4 + α5 + α6 for conventional banks.
The results of the Rosse-Panzar model are shown in table 5. We observe values between
0.3512 and 0.6233 for all types of banks and all years, meaning a monopolistic competition
structure. This result is in accordance with most former studies estimating the Rosse-Panzar
model (e.g. Bikker and Haaf, 2002). Al-Muharrami, Matthews and Khabari (2006) found a Hstatistic for the six countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, United Arab Emirates) for 0.47 with country fixed effects and for 0.24 in a
pooled model for the period 1993-2002. As a consequence, while our results are in line with
the conclusion of monopolistic competition of this paper, we observe a greater competition
level, which may result from the different sample of countries and also from a more recent
period, suggesting an increase of competition.
However the key result is the fact that the H-statistic is greater for Islamic banks than
for conventional banks for all years. This difference is only significant in 2005 and 2007.
Therefore, the estimations of the Rosse-Panzar model tend to corroborate our main finding
that Islamic banks are not less competitive than conventional banks.
11
V. Concluding remarks
In this paper, we compare the market power of Islamic and conventional banks by
computing Lerner indices for a large sample of banks from countries in which both types of
banks coexist. Our hypothesis is that market power is greater for Islamic banks, in line with
the view that these institutions benefit from clients with a more inelastic demand. This issue is
of fundamental interest to understand the normative implications of the expansion of Iskamic
banks. It has indeed been shown that lower bank competition may be detrimental to growth.
Our findings clearly reject this hypothesis. The comparison of Lerner indices shows not
significant difference in market power between Islamic and conventional banks. Furthermore,
the regression of market power indices even suggests a lower market power for Islamic banks.
We explain the lower market power of Islamic banks by their different religious and
economic incentives. Indeed Islamic banks are supposed to respect some “Islamic” norms of
behavior, such as the obligation to charge fair prices. This might consequently limit their
ability to charge high prices. Furthermore, Islamic banks have incentives to charge lower loan
rates than conventional banks, as they suffer more from the moral hazard behavior of
borrowers which can be favored through high rates.
Thus, our conclusions do not provide support on some detrimental effects of the
expansion of Islamic banks in terms of market power. Nevertheless the results of this study
should be considered with care. Indeed this is the first contribution on this issue. Further work
is therefore needed to confirm the findings and also to deepen the relevance of our
interpretations.
12
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13
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14
Table 1
Overview of the sample
This table gives the number of observations for each type of banks and for each country.
Country
Bahrain
Bangladesh
Brunei
Indonesia
Iran
Jordan
Kuwait
Malaysia
Mauritania
Pakistan
Qatar
Saudi Arabia
Sudan
Tunisia
Turkey
United Arab Emirates
Yemen
All
All banks
38
222
16
249
39
45
39
170
26
158
31
28
37
107
38
46
12
1301
Conventional banks
24
218
10
244
26
30
32
158
19
148
23
24
34
100
32
42
2
1166
Islamic banks
14
4
6
5
13
15
7
12
7
10
8
4
3
7
6
4
10
135
15
Table 2
Summary Statistics
This table displays the means for variables used in subsequent estimations for each type of banks. Standard
deviations are reported in brackets.
Total assets (thd USD)
Loans (thd USD)
Price of labor (in %)
Price of physical capital
(in %)
Price of borrowed funds
(in %)
Loans to investment
assets
Equity to assets
(in %)
All banks
3,719.65
(7,785.72)
1,946.81
(3,992.48)
1.10
(0.56)
104.04
(77.78
4.78
(2.71)
5.31
(71.23)
11.34
(8.71)
Conventional banks
3,771.21
(7,930.48)
1,936.93
(3,937.88)
1.11
(0.57)
104.36
(77.89)
4.93
(2.74)
2.42
(4.59)
10.95
(8.47)
Islamic banks
3,274.30
(6,408.39)
2,032.10
(4,451.36)
1.10
(0.42)
101.26
(77.11)
3.50
(2.06)
30.32
(219.88)
14.72
(9.96)
16
Table 3
Lerner indices
This table presents the Lerner index for each year and for each type of banks. Lerner indices are presented in
percentage. Standard deviations are displayed in brackets.
All banks
2000
2001
2002
2003
2004
2005
2006
2007
All
18.80
(13.28)
19.66
(14.05)
21.62
(14.77)
24.83
(16.34)
26.87
(17.03)
27.13
(16.65)
25.38
(15.68)
23.78
(15.40)
23.71
(15.76)
Conventional
banks
18.70
(13.49)
19.65
(14.39)
21.65
(15.09)
25.35
(16.49)
27.53
(16.80)
26.78
(16.60)
24.64
(14.78)
23.55
(14.62)
23.64
(15.63)
Islamic
banks
20.21
(10.56)
19.79
(9.83)
21.29
(11.02)
19.99
(14.47)
22.10
(18.34)
30.07
(17.28)
30.07
(20.28)
25.35
(20.28)
24.37
(16.91)
Difference
p-value
-1.51
0.73
-0.14
0.97
0.36
0.93
5.36
0.20
5.43
0.17
-3.28
0.43
-5.43
0.12
-1.79
0.63
-0.74
0.61
17
Table 4
Regression
Random effects GLS regression. The dependent variable is the Lerner index. *, **, *** denote an estimate
significantly different from 0 at the 10%, 5% or 1% level. Dummy variables for countries and for years are
included in the regression but are not reported.
Explanatory variables
Coefficient
Standard error
Intercept
-11.342
7.511
Islamic Dummy
-4.504*
2.547
2.515***
0.414
0.002
0.006
71.133***
5.752
Bank Size
Loans to Investment Assets
Equity to Assets
R²
Number of banks
Number of observations
0.3333
264
1301
18
Table 5
Robustness check: The Rosse-Panzar Model
This table displays the H-statistic estimated by the Rosse-Panzar model for each year and each type of banks. We
compute the Wald test (F-statistic) to test whether the H-statistic is significantly different for Islamic and for
conventional banks. *, **, *** denote a F-statistic significantly different from 0 at the 10%, 5% or 1% level.
2000
Conventional banks
0.5145
Islamic banks
0.5991
Wald test (F statistic)
0.91
2001
0.5473
0.6233
1.08
2002
0.4755
0.5526
0.80
2003
0.4003
0.4431
0.26
2004
0.3512
0.4084
1.08
2005
0.3573
0.4629
3.95**
2006
0.5271
0.5320
0.01
2007
0.4008
0.5801
6.08**
19
Working Papers
Laboratoire de Recherche en Gestion & Economie
______
D.R. n° 1
"Bertrand Oligopoly with decreasing returns to scale", J. Thépot, décembre 1993
D.R. n° 2
"Sur quelques méthodes d'estimation directe de la structure par terme des taux d'intérêt", P. Roger - N.
Rossiensky, janvier 1994
D.R. n° 3
"Towards a Monopoly Theory in a Managerial Perspective", J. Thépot, mai 1993
D.R. n° 4
"Bounded Rationality in Microeconomics", J. Thépot, mai 1993
D.R. n° 5
"Apprentissage Théorique et Expérience Professionnelle", J. Thépot, décembre 1993
D.R. n° 6
"Strategic Consumers in a Duable-Goods Monopoly", J. Thépot, avril 1994
D.R. n° 7
"Vendre ou louer ; un apport de la théorie des jeux", J. Thépot, avril 1994
D.R. n° 8
"Default Risk Insurance and Incomplete Markets", Ph. Artzner - FF. Delbaen, juin 1994
D.R. n° 9
"Les actions à réinvestissement optionnel du dividende", C. Marie-Jeanne - P. Roger, janvier 1995
D.R. n° 10
"Forme optimale des contrats d'assurance en présence de coûts administratifs pour l'assureur", S. Spaeter,
février 1995
D.R. n° 11
"Une procédure de codage numérique des articles", J. Jeunet, février 1995
D.R. n° 12
"Stabilité d'un diagnostic concurrentiel fondé sur une approche markovienne du comportement de rachat
du consommateur", N. Schall, octobre 1995
D.R. n° 13
"A direct proof of the coase conjecture", J. Thépot, octobre 1995
D.R. n° 14
"Invitation à la stratégie", J. Thépot, décembre 1995
D.R. n° 15
"Charity and economic efficiency", J. Thépot, mai 1996
D.R. n° 16
"Pricing anomalies in financial markets and non linear pricing rules", P. Roger, mars 1996
D.R. n° 17
"Non linéarité des coûts de l'assureur, comportement de prudence de l'assuré et contrats optimaux", S.
Spaeter, avril 1996
D.R. n° 18
"La valeur ajoutée d'un partage de risque et l'optimum de Pareto : une note", L. Eeckhoudt - P. Roger, juin
1996
D.R. n° 19
"Evaluation of Lot-Sizing Techniques : A robustess and Cost Effectiveness Analysis", J. Jeunet, mars 1996
D.R. n° 20
"Entry accommodation with idle capacity", J. Thépot, septembre 1996
i
D.R. n° 21
"Différences culturelles et satisfaction des vendeurs : Une comparaison internationale", E. VauquoisMathevet - J.Cl. Usunier, novembre 1996
D.R. n° 22
"Evaluation des obligations convertibles et options d'échange", Schmitt - F. Home, décembre 1996
D.R n° 23
"Réduction d'un programme d'optimisation globale des coûts et diminution du temps de calcul, J. Jeunet,
décembre 1996
D.R. n° 24
"Incertitude, vérifiabilité et observabilité : Une relecture de la théorie de l'agence", J. Thépot, janvier 1997
D.R. n° 25
"Financement par augmentation de capital avec asymétrie d'information : l'apport du paiement du
dividende en actions", C. Marie-Jeanne, février 1997
D.R. n° 26
"Paiement du dividende en actions et théorie du signal", C. Marie-Jeanne, février 1997
D.R. n° 27
"Risk aversion and the bid-ask spread", L. Eeckhoudt - P. Roger, avril 1997
D.R. n° 28
"De l'utilité de la contrainte d'assurance dans les modèles à un risque et à deux risques", S. Spaeter,
septembre 1997
D.R. n° 29
"Robustness and cost-effectiveness of lot-sizing techniques under revised demand forecasts", J. Jeunet,
juillet 1997
D.R. n° 30
"Efficience du marché et comparaison de produits à l'aide des méthodes d'enveloppe (Data envelopment
analysis)", S. Chabi, septembre 1997
D.R. n° 31
"Qualités de la main-d'œuvre et subventions à l'emploi : Approche microéconomique", J. Calaza - P. Roger,
février 1998
D.R n° 32
"Probabilité de défaut et spread de taux : Etude empirique du marché français", M. Merli - P. Roger, février
1998
D.R. n° 33
"Confiance et Performance : La thèse de Fukuyama", J.Cl. Usunier - P. Roger, avril 1998
D.R. n° 34
"Measuring the performance of lot-sizing techniques in uncertain environments", J. Jeunet - N. Jonard,
janvier 1998
D.R. n° 35
"Mobilité et décison de consommation : premiers résultas dans un cadre monopolistique", Ph. Lapp,
octobre 1998
D.R. n° 36
"Impact du paiement du dividende en actions sur le transfert de richesse et la dilution du bénéfice par
action", C. Marie-Jeanne, octobre 1998
D.R. n° 37
"Maximum resale-price-maintenance as Nash condition", J. Thépot, novembre 1998
D.R. n° 38
"Properties of bid and ask prices in the rank dependent expected utility model", P. Roger, décembre 1998
D.R. n° 39
"Sur la structure par termes des spreads de défaut des obligations », Maxime Merli / Patrick Roger,
septembre 1998
D.R. n° 40
"Le risque de défaut des obligations : un modèle de défaut temporaire de l’émetteur", Maxime Merli,
octobre 1998
D.R. n° 41
"The Economics of Doping in Sports", Nicolas Eber / Jacques Thépot, février 1999
D.R. n° 42
"Solving large unconstrained multilevel lot-sizing problems using a hybrid genetic algorithm", Jully Jeunet,
mars 1999
D.R n° 43
"Niveau général des taux et spreads de rendement", Maxime Merli, mars 1999
ii
D.R. n° 44
"Doping in Sport and Competition Design", Nicolas Eber / Jacques Thépot, septembre 1999
D.R. n° 45
"Interactions dans les canaux de distribution", Jacques Thépot, novembre 1999
D.R. n° 46
"What sort of balanced scorecard for hospital", Thierry Nobre, novembre 1999
D.R. n° 47
"Le contrôle de gestion dans les PME", Thierry Nobre, mars 2000
D.R. n° 48
″Stock timing using genetic algorithms", Jerzy Korczak – Patrick Roger, avril 2000
D.R. n° 49
"On the long run risk in stocks : A west-side story", Patrick Roger, mai 2000
D.R. n° 50
"Estimation des coûts de transaction sur un marché gouverné par les ordres : Le cas des composantes du
CAC40", Laurent Deville, avril 2001
D.R. n° 51
"Sur une mesure d’efficience relative dans la théorie du portefeuille de Markowitz", Patrick Roger / Maxime
Merli, septembre 2001
D.R. n° 52
"Impact de l’introduction du tracker Master Share CAC 40 sur la relation de parité call-put", Laurent Deville,
mars 2002
D.R. n° 53
"Market-making, inventories and martingale pricing", Patrick Roger / Christian At / Laurent Flochel, mai
2002
D.R. n° 54
"Tarification au coût complet en concurrence imparfaite", Jean-Luc Netzer / Jacques Thépot, juillet 2002
D.R. n° 55
"Is time-diversification efficient for a loss averse investor ?", Patrick Roger, janvier 2003
D.R. n° 56
“Dégradations de notations du leader et effets de contagion”, Maxime Merli / Alain Schatt, avril 2003
D.R. n° 57
“Subjective evaluation, ambiguity and relational contracts”, Brigitte Godbillon, juillet 2003
D.R. n° 58
“A View of the European Union as an Evolving Country Portfolio”, Pierre-Guillaume Méon / Laurent Weill,
juillet 2003
D.R. n° 59
“Can Mergers in Europe Help Banks Hedge Against Macroeconomic Risk ?”, Pierre-Guillaume Méon /
Laurent Weill, septembre 2003
D.R. n° 60
“Monetary policy in the presence of asymmetric wage indexation”, Giuseppe Diana / Pierre-Guillaume
Méon, juillet 2003
D.R. n° 61
“Concurrence bancaire et taille des conventions de services”, Corentine Le Roy, novembre 2003
D.R. n° 62
“Le petit monde du CAC 40”, Sylvie Chabi / Jérôme Maati
D.R. n° 63
“Are Athletes Different ? An Experimental Study Based on the Ultimatum Game”, Nicolas Eber / Marc
Willinger
D.R. n° 64
“Le rôle de l’environnement réglementaire, légal et institutionnel dans la défaillance des banques : Le cas
des pays émergents”, Christophe Godlewski, janvier 2004
D.R. n° 65
“Etude de la cohérence des ratings de banques avec la probabilité de défaillance bancaire dans les pays
émergents”, Christophe Godlewski, Mars 2004
D.R. n° 66
“Le comportement des étudiants sur le marché du téléphone mobile : Inertie, captivité ou fidélité ?”,
Corentine Le Roy, Mai 2004
D.R. n° 67
“Insurance and Financial Hedging of Oil Pollution Risks”, André Schmitt / Sandrine Spaeter, September,
2004
iii
D.R. n° 68
“On the Backwardness in Macroeconomic Performance of European Socialist Economies”, Laurent Weill,
September, 2004
D.R. n° 69
“Majority voting with stochastic preferences : The whims of a committee are smaller than the whims of its
members”, Pierre-Guillaume Méon, September, 2004
D.R. n° 70
“Modélisation de la prévision de défaillance de la banque : Une application aux banques des pays
émergents”, Christophe J. Godlewski, octobre 2004
D.R. n° 71
“Can bankruptcy law discriminate between heterogeneous firms when information is incomplete ? The case
of legal sanctions”, Régis Blazy, october 2004
D.R. n° 72
“La performance économique et financière des jeunes entreprises”, Régis Blazy/Bertrand Chopard, octobre
2004
D.R. n° 73
“Ex Post Efficiency of bankruptcy procedures : A general normative framework”, Régis Blazy / Bertrand
Chopard, novembre 2004
D.R. n° 74
“Full cost pricing and organizational structure”, Jacques Thépot, décembre 2004
D.R. n° 75
“Prices as strategic substitutes in the Hotelling duopoly”, Jacques Thépot, décembre 2004
D.R. n° 76
“Réflexions sur l’extension récente de la statistique de prix et de production à la santé et à l’enseignement”,
Damien Broussolle, mars 2005
D. R. n° 77
“Gestion du risque de crédit dans la banque : Information hard, information soft et manipulation ”, Brigitte
Godbillon-Camus / Christophe J. Godlewski
D.R. n° 78
“Which Optimal Design For LLDAs”, Marie Pfiffelmann
D.R. n° 79
“Jensen and Meckling 30 years after : A game theoretic view”, Jacques Thépot
D.R. n° 80
“Organisation artistique et dépendance à l’égard des ressources”, Odile Paulus, novembre 2006
D.R. n° 81
“Does collateral help mitigate adverse selection ? A cross-country analysis”, Laurent Weill –Christophe J.
Godlewski, novembre 2006
D.R. n° 82
“Why do banks ask for collateral and which ones ?”, Régis Blazy - Laurent Weill, décembre 2006
D.R. n° 83
“The peace of work agreement : The emergence and enforcement of a swiss labour market institution”, D.
Broussolle, janvier 2006.
D.R. n° 84
“The new approach to international trade in services in view of services specificities : Economic and
regulation issues”, D. Broussolle, septembre 2006.
D.R. n° 85
“Does the consciousness of the disposition effect increase the equity premium” ?, P. Roger, juin 2007
D.R. n° 86
“Les déterminants de la décision de syndication bancaire en France”, Ch. J. Godlewski
D.R. n° 87
“Syndicated loans in emerging markets”, Ch. J. Godlewski / L. Weill, mars 2007
D.R. n° 88
“Hawks and loves in segmented markets : A formal approach to competitive aggressiveness”, Claude
d’Aspremont / R. Dos Santos Ferreira / J. Thépot, mai 2007
D.R. n° 89
“On the optimality of the full cost pricing”, J. Thépot, février 2007
D.R. n° 90
“SME’s main bank choice and organizational structure : Evidence from France”, H. El Hajj Chehade / L.
Vigneron, octobre 2007
iv
D.R n° 91
“How to solve St Petersburg Paradox in Rank-Dependent Models” ?, M. Pfiffelmann, octobre 2007
D.R. n° 92
“Full market opening in the postal services facing the social and territorial cohesion goal in France”, D.
Broussolle, novembre 2007
D.R. n° 2008-01
A behavioural Approach to financial puzzles, M.H. Broihanne, M. Merli,
P. Roger, janvier 2008
D.R. n° 2008-02
What drives the arrangement timetable of bank loan syndication ?, Ch. J. Godlewski, février 2008
D.R. n° 2008-03
Financial intermediation and macroeconomic efficiency, Y. Kuhry, L. Weill, février 2008
D.R. n° 2008-04
The effects of concentration on competition and efficiency : Some evidence from the french audit
market, G. Broye, L. Weill, février 2008
D.R. n° 2008-05
Does financial intermediation matter for macroeconomic efficiency?, P.G. Méon, L. Weill, février 2008
D.R. n° 2008-06
Is corruption an efficient grease ?, P.G. Méon, L. Weill, février 2008
D.R. n° 2008-07
Convergence in banking efficiency across european countries, L. Weill, février 2008
D.R. n° 2008-08
Banking environment, agency costs, and loan syndication : A cross-country analysis, Ch. J. Godlewski,
mars 2008
D.R. n° 2008-09
Are French individual investors reluctant to realize their losses ?, Sh. Boolell-Gunesh / M.H. Broihanne /
M. Merli, avril 2008
D.R. n° 2008-10
Collateral and adverse selection in transition countries, Ch. J. Godlewski / L. Weill, avril 2008
D.R. n° 2008-11
How many banks does it take to lend ? Empirical evidence from Europe, Ch. J. Godlewski, avril 2008.
D.R. n° 2008-12
Un portrait de l’investisseur individuel français, Sh. Boolell-Gunesh, avril 2008
D.R. n° 2008-13
La déclaration de mission, une revue de la littérature, Odile Paulus, juin 2008
D.R. n° 2008-14
Performance et risque des entreprises appartenant à des groupes de PME, Anaïs Hamelin, juin 2008
D.R. n° 2008-15
Are private banks more efficient than public banks ? Evidence from Russia,
Schoors / Laurent Weill, septembre 2008
D.R. n° 2008-16
Capital protected notes for loss averse investors : A counterintuitive result, Patrick Roger, septembre
2008
D.R. n° 2008-17
Mixed risk aversion and preference for risk disaggregation, Patrick Roger, octobre 2008
D.R. n° 2008-18
Que peut-on attendre de la directive services ?, Damien Broussolle, octobre 2008
D.R. n° 2008-19
Bank competition and collateral : Theory and Evidence, Christa Hainz / Laurent Weill / Christophe J.
Godlewski, octobre 2008
D.R. n° 2008-20
Duration of syndication process and syndicate organization, Ch. J. Godlewski, novembre 2008
D.R. n° 2008-21
How corruption affects bank lending in Russia, L. Weill, novembre 2008
D.R. n° 2008-22
On several economic consequences of the full market opening in the postal service in the European
Union, D. Broussolle, novembre 2008.
Alexei Karas / Koen
v
D.R. n° 2009-01
Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans, Z.
Fungacova, C.J. Godlewski, L. Weill
D.R. n° 2009-02
Do Islamic Banks Have Greater Market Power ?, L. Weill
vi